India has emerged as the world’s fastest-growing driver of oil demand, surpassing China in a significant realignment of the global oil market—where China had dominated growth for over 25 years. However, while India’s growth rate now exceeds China’s, the scale of India’s oil consumption remains far smaller and unlikely to match China’s historic boom.
Following decades of rapid expansion, China’s oil demand growth has slowed markedly due to structural changes in its economy and energy consumption patterns. Conversely, India’s oil demand continues to rise steadily, making it the primary contributor to global oil demand growth in recent years. Yet, the pace of India’s increase—currently around 200,000 barrels per day (bpd) annually—is less than half of China’s average yearly growth of 485,000 bpd during its peak growth years from 2000 to 2025, according to Bloomberg Opinion columnist Javier Blas.
Slowing Growth in China, Steady Rise in India
Since the COVID-19 pandemic caused a slump in demand worldwide, India’s oil consumption has stabilized at roughly 150,000 to 200,000 bpd annual growth, a trend that forecasters expect to persist. China, meanwhile, faces slower GDP growth, a weakening property sector, and the rapid adoption of electric vehicles and LNG-powered trucks, which are reducing reliance on traditional gasoline and diesel fuels.
India’s ascension as the top oil demand growth driver was anticipated but has occurred sooner than many analysts predicted just a couple of years ago. This shift highlights a broader trend: while China’s oil demand growth decelerates, India’s demand is expanding—but not at a scale comparable to China’s past surge.
Growth Rates vs. Absolute Consumption
OPEC’s latest Monthly Oil Market Report projects that China’s oil demand will grow by a modest 1.5% this year compared to 2024, whereas India’s demand is expected to increase by 3.4%. Yet, in absolute terms, China will consume more than 16 million bpd this year—nearly triple India’s estimated 6 million bpd.
Notably, India’s oil demand in March was slightly lower year-on-year, a signal that tempered the enthusiasm of oil market bulls and major producers like Saudi Aramco. Diesel and other transportation fuels are expected to support India’s oil demand growth, with an anticipated increase of 188,000 bpd this year and further growth of 246,000 bpd in 2026, driven by robust economic expansion and healthy transportation and manufacturing activity.
India’s Growth Potential and Limitations
India is poised to be the fastest-growing oil demand region among large economies in the coming decade, according to Goldman Sachs analyst Nikhil Bhandari. Rising incomes and expanding manufacturing are expected to propel India to account for roughly one-third of global oil demand growth over the next ten years.
However, despite India’s accelerating demand, its total oil consumption will remain substantially below China’s. The rapid expansion China experienced—averaging nearly half a million barrels per day in new demand annually for more than two decades—is unlikely to be replicated by India anytime soon.
China’s shift toward electric vehicles and alternative fuels is permanently curbing its road fuel demand, signaling a structural plateau in consumption. This trend, coupled with China’s slower economic growth, contrasts with India’s steady but more modest increase in oil use.
As India reaches a critical inflection point in income growth, its oil demand will continue to rise, but the scale and speed of that growth will be tempered compared to China’s previous trajectory. The global oil market is thus witnessing a historic transition: India is now the main engine of demand growth, but the era of China-style surges in oil consumption has passed.
